Reliance Industries: Reliance Industries (RIL) has come forward to save Future Retail Limited (FRL) by taking over the operations of its stores and offering jobs to its employees. However, the Kishore Biyani-led conglomerate is currently fighting a legal battle with e-commerce giant Amazon in several courts over the sale of its business to RIL.
According to sources, Reliance Retail has started taking over the operations of future retail stores like Big Bazaar and has started replacing them with its own brand stores.
Difficult to raise working capital for Future Group
Future Group is finding it difficult to meet its working capital requirements. In a stock exchange filing on February 26, Future Retail said it plans to scale down its offline operations and instead focus on expanding its online and home delivery businesses to offset losses in the coming months.
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The company said, “The company is finding it difficult to raise funds to meet its working capital requirements. Growing losses at the store level is a big concern for him and in such a situation, losses are increasing due to large operations.”
4,445 crore loss in four quarters
The company has incurred a loss of Rs 4,445 crore in the last four quarters. Due to huge dues, termination notices have been received from a large number of stores and it will no longer have access to those stores.
The retail company also informed that it has extended the long stop date for its scheme of arrangement with Reliance Industries till September 30.
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The deal was done between Reliance and Future Group for 24,713 crores
“The company expects that the proposed scheme of arrangement with Reliance will be implemented, which will benefit all the stakeholders,” the company said.
In August, 2020, Future Retail Limited, Future Group Companies and Reliance Retail Ventures Limited (RRVL) approved a Scheme of Arrangement for transfer of Retail and Logistics business of Fuzer Group to RRVL on a one-time basis for a total of Rs 24,713 crore .
6,000 crore owed to creditors and landlords on Future
At the time of the arrangement, Future Group was in serious financial trouble. It has defaulted on dues to creditors and landlords of leased premises. The dues of creditors and landlords have crossed Rs 6,000 crore.
According to sources, Reliance has signed lease agreements for the premises of several landlords with the aim of ensuring payment of dues so that it can continue its operations in these premises. Reliance has so far spent Rs 1,500 crore to clear the dues.
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